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While walking around some areas, and also on the Overworld map, you will randomly trigger battles. Different enemies are found in different areas, and their level generally scales with average leveling during the game. This means that as you progress through the game, new areas are opened to exploration with harder enemies, while at the same time your party should be increasing in attack power and health.

Combat is turn-based in Final Fantasy VII, meaning each character is forced to wait for a certain period of time before performing the selected action. You can have a maximum of three party members in any battle. You will see the fight display at the bottom of the screen, which shows each party member's HP, MP, status effects, limit break bar, action menu and time bar. The time bar will continue to fill after each action, and when it is full that party member will perform their action. You can set actions for party members during their wait times. Certain status effects can slow down or speed up the wait time.

Use + to cycle through the party members on the battle field and ↑ ↓ ←→ to navigate the menu. The five basic actions you can choose from are:

Attack

Magic

Item

Defend

Wait

Each of these actions can be modified depending on what materia is equipped to the party member. Attacking will result in a physical attack from the party member, which can be dodged, blocked by another enemy or not performed at all in cases where the enemy disappears or is out of reach. In the magic menu you will find all the spells, summons and enemy skills associated with the equipped materia. Using magic consumes your MP, and different spells have different efficacy depending on whom they are used against. Items can be used to heal the party member who uses it, or any other combatant, enemies included. Some items are designed to attack an enemy and have specific effects, while others, such as armor or weapons can be thrown at enemies for varying degrees of damage.

The last two actions, defending and waiting are useful for different strategies or when you need a different order of attacks. Defending uses your turn and resets the wait bar, but lowers damage received from enemies. Defending comes in handy when you want to give all kills to another party member, either to gain them experience or when trying to level up their second limit break. Waiting isn't a menu option, but rather not choosing any option. Waiting is useful when you have a limit but don't want to use it, or you need another character to take out a front row enemy or enemy barrier first. While waiting, the wait bar remains full and you can choose your action at any time.

Limit breaks occur when the limit break bar fills up, which happens as the party member takes damage. When the limit bar fills, the wait bar speeds up a great deal, and often results in a different attack order as the limit breaking character skips ahead. The limit break option replaces the attack option in your menu, so you will need to use the limit before getting the option to do normal physical attacks back. There are different levels of limit breaks, and each level needs to be set manually in the menu before a battle. This allows you to use lower level limit breaks if you feel the need. Lower level limits aren't necessarily weaker than higher level ones, as the damage continues to scale with the character.

Any party member can use any menu option in battle, however, some are better suited to certain aspects. Some characters have weapons and armor which increase defense, or increase magic, or any other stat. It may be easier to group characters into certain types, such as magic user, attacker, defender, etc. based on where it seems their strength lies. To that end, characters with high MP and low HP make good spellcasters, because they can be put in the back row since magic is a long-range attack. Likewise, characters with high HP can be used to block for weaker characters and party members with high attack power can be used for counterattacking and melee combat.

You can set the formation of your party (back and front rows) in the menu before you go into combat. Back row party members will take less damage from enemies that don't have long-range weapons and likewise will deal less damage with weapons that aren't long-range. Creating a back row can put you at a disadvantage as well. If you are attacked from behind, then your formation is backwards and your back row becomes your front row. If you put a weaker character in the back row to protect them, this means they will be taking full damage, while strong melee characters end up in the back row doing half the damage.

How often you need to heal a character depends entirely on how much damage the boss does, but as a general rule, if the character has less than a half of its HP left, it's always a good idea to heal up. At first, you probably rely on Potions and Hi-Potions, but in general, using Restore materia is much cheaper and more effective in the long run. Once you have the Big Guard enemy skill, White Wind becomes a rather handy enemy skill as well, because Cure2's effectiveness is reduced by Big Guard or MBarrier, while White Wind goes straight through them. The same also goes for Aeris' limit breaks.

Protection and haste are the most useful spells in boss fights when coupled with All materia. Haste-All, Barrier-All and MBarrier-All make your party faster and less damageable. But in general, if you have Big Guard enemy skill, things are much easier.

If the boss is strong against magic and needs a good physical beating, use Hypers to get the party to Fury status, making them more likely to get limit breaks.

Know your surroundings and plan accordingly. Equipping the proper materia both offensively and defensively can be a tremendous help.

Plan ahead. While waiting for someone's action to become available, look to see if anyone is low on health, or has a status effect. Keeping your party healthy and in fighting shape is important.

Use limit breaks effectively. Saving limit breaks for bosses or going with a magic or item attack or even just defending when the enemy is low and can be taken down in one hit by someone else will save your limit for the next enemy.

Stock up on Hypers as they increase party members' wait bar speed and cure Sadness, which drastically slows your turns down.

Keep a few Phoenix Down or materia that can revive people equipped. Even if you don't get a game over, it is easy to lose a party member, and then they won't get the experience from winning the battle.